While federal law allows a judgment creditor to garnish up to 25 percent of a debtor's disposable wages, New Jersey has established stricter rules to protect low-income earners. However, federal law still can come into play depending on the type of debt owed.
Process of Garnishment
Garnishment in New Jersey typically requires a creditor to get a judgment against the debtor first. The creditor then submits an application to the court with supporting documents that show the amount of the judgment and information on the debtor’s employer, requesting the court to order the debtor’s employer to withhold wages to satisfy the judgment. The creditor is required to serve notice of the application on the debtor and file a form with the court to show how the person was served.
New Jersey uses more lenient garnishment standards for lower-income debtors than the applicable federal law. That's good news for debtors, since the state or federal law that results in the lower garnishment amount is the law that applies. Creditors can take up to 10 percent of a debtor’s gross income if he earns no more than 250 percent of the federal poverty level, based on the household size. If he earns more than this amount, the creditor can take up to 25 percent of the debtor’s disposable earnings. Disposable earnings refer to the wages that remain after taxes and payments to Social Security.
The federal law also uses the 25-percent figure. However, another calculation also must be made under federal law. If the debtor’s disposable earnings minus 30 times the federal minimum wage is less than 25 percent of the disposable earnings, this calculation must be used instead. For example, if an employee had disposable wages of $250 and the federal minimum wage was $7.25 an hour, the employee could only have $33.50 garnished as represented in the calculation: $250 - ($7.25 * 30) = $33.50. Using the 25-percent calculation would have resulted in $62.50. The lower figure must be used.
Using the state rules, in 2015 the federal poverty level for a family of four was $24,250, or a weekly income of $466. If the debtor earned $350 for the week, the creditor could garnish wages for $35 that week. However, if the person earned $2,000 for the week and the debtor had $1,500 of disposable wages, the creditor could garnish up to $375 of the debtor's wages. Based on the federal rules, if the debtor had disposable earnings of $290 and gross income or $350, the creditor in theory could garnish $72.50. However, since $72.50 is more than $35, the state law would be applied.
Certain debts do not follow the same process or limits listed above. For example, child support, student loans or tax debts can cause an employee’s wages to be garnished without the need for a court judgment. Child support debt can result in 65 percent of an employee’s wages being deducted if he has no other dependents and is in arrears by at least 12 weeks. Defaulted student loans can lead to 15 percent of an employee’s disposable wages being garnished. The amount of a garnishment for tax debt depends on how many dependents a person has, as well as his deduction rate.